Rupee edges up; stocks down for third session

 (Colombo) REUTERS: The Sri Lankan rupee ended slightly higher yesterday, easing from a record low hit in the previous session, as exporters dollar sales surpassed importer demand for the greenback in dull trade, while stocks ended weaker for a third straight session to hit a one-week low.

The rupee ended at 171.20/40 per dollar, compared with the previous close of 171.30/50. 

The rupee fell to an all-time low of 171.60 per dollar on Wednesday, surpassing the previous low of 171.00 hit on Tuesday amid foreign selling in government securities and exporter greenback sales, market sources said. 

The Central Bank surprised financial markets on Oct. 2 by leaving its key policy rates unchanged, despite heavy pressure on the rupee and foreign outflows from government securities. 

The Central Bank said on Oct. 2 it purchased US$ 4 million from the market in the previous day, but it has sold a net US$ 184 million in the market so far this year to defend the currency.

The rupee has weakened 1.24 percent so far this month after a 4.7 percent drop in September against the dollar. It has declined 11.54 percent so far this year, recording its sharpest fall since 2001.

The Colombo stock index ended 0.57 percent down at 5,838.48, its lowest close since Oct. 4 and slipping further away from its highest close since Sept. 20 hit on Monday. The index fell to its lowest close since Dec. 13, 2013 on Tuesday. It fell 3.6 percent last month and is down 8.3 percent so far this year.

Data from the Central Bank showed foreign investors sold government securities worth a net Rs.1.8 billion (US $10.58 million) in the week ended Oct. 3. Sri Lanka has seen a net outflow of Rs.74.3 billion in securities so far this year.

Stock market turnover was Rs.301.8 million (US$1.76 million) yesterday, less than half of this year’s daily average of Rs.766.9 million.

Foreign investors were net sellers of Rs.50.2 million worth of shares yesterday, extending the year to date net foreign outflow to Rs.6.3 billion worth of equities.